Financial Performance

Whirlpool Lowers Guidance, Shares Drop 6%

The appliance maker's third-quarter results were hurt by rising costs of raw materials and an unfavorable price mix.
Matthew HellerOctober 24, 2017

Whirlpool shares fell more than 6% in after-hours trading after the appliance maker reported quarterly earnings and sales below expectations and lowered its guidance for the full year.

Whirlpool said Monday it earned $276 million, or $3.72 a share, in the third quarter, compared to $238 million, or $3.10 a share, in the year-ago period. Adjusted for one-time items, earnings came in at $3.83 a share, compared with $3.66 a share a year ago.

Sales rose to $5.4 billion from $5.2 billion a year ago. Analysts had expected adjusted earnings of $3.93 a share on sales of $5.5 billion.

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“We are pleased with our revenue growth and free cash flow improvement but are not satisfied with our operating margins, which were impacted by raw material inflation, unfavorable price mix and slow progress on our European integration,” CEO Marc Bitzer said in a news release.

The company, he added, is “implementing strong actions to deliver our long-term goals, including recently-announced global cost-based price increases” to soften the impact of rising raw materials costs, as well as an initiative to reduce fixed costs by $150 million.

Whirlpool shares dropped 6.6% as the company also announced that it now expects to earn $11.10 to $11.40 a share for 2017, down from an earlier estimate of $12.40 to $12.90 per share.

Costs of key raw materials for Whirlpool’s appliances, particularly steel and resins, have increased worldwide. “Whirlpool has been riding on its innovation strategy … to tap additional sales and gain market share,” Zacks Equity Research said.

“Moreover, the company’s solid integration and cost-productivity activities have been enhancing performance,” it added. “These factors, along with its robust brands portfolio and continued strength across North America and Latin America, have been growth drivers.”

In North America, Whirlpool’s sales rose 4% in the third quarter, excluding currency impact, while Latin America sales increased 5%. It continues to expect full-year 2017 industry unit shipments in the U.S. to increase by 4% to 6%.